Latest Update on NLRB’s Notice Posting Rule.  Last month, I wrote that the effective date of the recently-adopted rule requiring employers to post a notice to employees advising them of their rights under the National Labor Relations Act had been postponed until January 31, 2012.  Apparently, part of the cause of this delay is tied to the filing of lawsuits by business and professional groups challenging the rule’s legality.  In a case before one federal district court, the business groups have claimed that the National Labor Relations Board (“NLRB”) does not have jurisdiction to impose obligations on employers that are not involved in either a representation case (where unions are trying to organize) or unfair labor practice (“ULP”) case.  Those opposing the rule argue that the NLRB has exceeded its authority by noting that an employer who fails to post a notice will be charged with a ULP.  In opposition, the NLRB claims that it has full authority to enact the rule because it is charged not only with enforcing employee rights, but also with informing employees of those rights.  The parties have filed motions for summary judgments, and oral arguments are scheduled for December 19, 2011.  I will continue to keep you posted regarding your obligations under the new rule as developments occur.

Individual Liability for Wage and Hour Claims.  In a recent federal case, a court found that a company’s Chief Executive Officer (“CEO”) was personally liable, along with the corporation, for payments to employees under a wage and hour settlement.  The employee, a supervisor for a large supermarket chain, brought a class action against the supermarket for unpaid overtime.  While the case was settled, the company was thereafter unable to make payments under the settlement agreement.  As a result, the employees reinstated their claim, arguing that the company’s CEO (who was also a defendant in the original action) was liable for payments as an “employer” under the law.  The court agreed, noting that the Fair Labor Standards Act defined an “employer” broadly to include “any person acting directly or indirectly in the interest of the employer in relation to the employee.”  The CEO attempted to argue that he was not an employer under the “economic reality” test, which examines the authority of the individual or company to (1) hire or fire; (2) supervise and control the employee’s work schedule and conditions; (3) determine the rate and method of payment; and (4) maintain employment records. The Court disagreed, noting that the CEO had retained full operational control of the company, and had asserted in an affidavit in an unrelated case that he was the “sole owner” of the company and oversaw the operation.  As a result of his role in the company, the CEO was also liable for monetary payments to the employees.

Court Finds Employer Liable for Retaliation, but Limits Damages.  After a bench trial, a district court recently found that an employee’s former employer retaliated against him by notifying the discharged employee’s subsequent employers that he had filed an EEOC charge against it.  While the court did not find that the employee had suffered any monetary damages, the court did find that the original employer had engaged in an adverse action when it disseminated the information about the EEOC Charge, and awarded the employee $1,000 in emotional distress damages, $1,000 in punitive damages, and attorneys' fees.  As this case reminds us, employers should take caution and limit their remarks to an employee’s subsequent employers.

EPLI Coverage for Cases Initiated by the EEOC.  Recently, a federal district court ruled that an employer’s employment practices liability insurance (“EPLI”) did not provide any type of coverage for an action brought by the Equal Employment Opportunity Commission (“EEOC”).  In that case, the policy defined a “covered claim” as "a civil, administrative, or arbitration proceeding commenced by the service of a complaint or charge, which is brought by any past, present or prospective employees."   The court, interpreting the language literally, concluded that because the EEOC was not an “employee,” any cases filed by the EEOC were not subject to coverage.   Note that this does not apply to claims by employees that are filed with the EEOC, but to actual cases in which the EEOC becomes a party, such as when the EEOC itself initiates a suit against a company.  In light of this decision, it would be wise to check your insurance to ensure that you are protected should the EEOC, or another governmental agency, initiate a claim against your company that might otherwise be covered by your EPLI.